The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1

-If in the short run, at the profit maximizing level of output, the average revenue curve of a competitive firm lies above the average cost curve then:

Question

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1
 
-If in the short run, at the profit maximizing level of output, the average revenue curve of a competitive firm lies above the average cost curve then:

Quizplus · Accepted Answer

If the average revenue curve lies above the average cost curve, the firm is making a profit. In this situation, the firm enjoys above-normal profits because it is covering all its costs, including both variable and fixed costs, and still has some profit left over.

The Figure Given Below Shows the Revenue and Cost Curves